6 Tips for More Effective Invoicing
It has to be done. You need to invoice clients in order to get paid.
Unfortunately, invoicing can be a bit of a pain. Remembering to send invoices each month and chasing payments can get tedious. However, if you want to get paid, it’s vital that you take care of the paperwork.
If you want to engage in more effective invoicing, you need to have a plan. Here are six tips that you can use for more effective invoicing overall:
1. List a Due Date
One of the most effective things you can do when invoicing is to list a due date.
Providing a due date offers a deadline to your clients. It gives them a timeline to follow. Without the due date, you just have to hope that your client will pay in a timely manner.
It’s true that you can’t force someone to pay by the due date you set, but you increase your chances of timely payment when you include a due date on your invoice.
Common invoice timeframes offered include 14 days, 30 days, 60 days, and 90 days. However, it makes sense to keep things as short as possible. You can even invoice using “due upon receipt.”
Whatever you decide, choose a regular time period. Discuss with the client ahead of time so that they know when you expect to be paid. If you have a contract, include that information in the contract. You will have more effective invoicing if you set expectations up front, and then follow them up when you bill your clients.
2. Include Payment Types Accepted
Be clear what payment types you accept. Effective invoicing means that you make it easy for your clients to pay you. The more types of payment you accept, the easier it is for your clients to pay you.
When possible, accept credit cards, PayPal, and check. If you accept check, make sure you include your address on the invoice so that clients can send you payment quickly.
If you don’t want to have to worry about accepting credit cards through a separate merchant account, look to use a processor like Due. You only have to worry about one account, and everything is managed for a competitive price. It’s much easier than setting up a merchant account and then arranging for other payment methods on top of it.
You can also accept PayPal and other person-to-person payments. Finally, don’t forget about cryptocurrencies. Bitcoin and its alternatives can be great ways to get paid quickly and inexpensively.
3. Know Who Should Get the Invoice
The most effective invoicing practice involves making sure that you know who should receive the invoice. Is there an accounts payable email address to send to? Do you have the name of a contact?
Find out this information. You want the invoice to go through as few people as possible. The more people have to pass the invoice on to someone else, the more likely it is that your payment will be delayed. Even worse, your invoice could be lost.
Before you start work, find out where the invoice should be sent. If you can send the invoice directly to the person in charge of paying you, there’s a better chance you will get paid faster, and without fuss.
Your best chance is if the email is role-based, rather than person-based. If you are given a person-based email, ask for a backup, just in case. With person-based emails, there’s a greater chance that you fall through the cracks if your contact moves on.
4. Keep Good Records of Your Work
Make sure that you keep records of the work you’re doing. If you freelance, keep track of the project. If you charge hourly, make sure you have time tracking that can prove what you spent.
From inventory to time to published tweets, whatever it is you’re supposed to be measuring, keep track. You want detailed records to back up your invoice.
Depending on the situation, you might not need to give everything over all the time. Even if you don’t, though, it’s a good idea to track everything. If there is a dispute over the invoice, you need to make sure you can back up your claims.
This includes keeping records of contracts and other materials that you can return to. Carefully organize your paperwork and documentation so that things don’t fall through the cracks and wind up holding you back.
In some cases, though, you are expected to list everything. If this is the case, make your invoice easy to read, and make line items clear. That way, you don’t end up wasting time explaining things to your clients and customers. Instead, they will see immediately how things stand. They are more likely to pay quickly when they don’t have to ask questions.
5. Consider Automating Your Invoicing
One of the most effective invoicing strategies is to avoid thinking about it at all. If you don’t have to remember to send out invoices, so much the better.
Companies like Due can help you set up recurring invoices so that you don’t have to keep invoicing each month. If you charge a subscription, or if there is a standing order, it can be easy to set up recurring invoices.
That way, the invoices go out like clockwork — and you get paid like clockwork.
Even if you can’t send out the same invoice each month, there are ways to make things easier. Consider creating templates so that you don’t have to fill in everything fresh. You can also use an invoicing program that sends reminders automatically if payment hasn’t been made within a specified amount of time.
This can be a perfect way to chase down payments without having to remember to go in and make manual reminders. Consider setting up these reminders when you invoice so that, at the very least, you have some part of it automated.
6. Consider Late Payment Fees
Finally, you can consider late payment fees. This can be a good way to encourage clients to pay on time since they will be penalized if they don’t. You can charge a flat fee or a percentage.
Many business owners wait until after an invoice has been paid 30 days late or longer before they start charging fees. You can decide how it will work best for your business.
As with other effective invoicing methods, it’s important to make sure that you spell this one out ahead of time. Discuss the terms with your client before you send the first invoice. Include the fee in the contract. That way, there will be no questions about what is happening and it won’t be a surprise.
Also, clearly mention the late payment fee on the invoice. Make it prominent so that your client knows what to expect — and so that they are more likely to move forward with payment in a timely manner.
It can be difficult to get clients and customers to pay on time for just about anything. As a result, you can fall behind in your own business payments.
While you can’t control everything about your clients, you can change the way you invoice. By applying effective invoicing strategies, it’s possible for you to increase the chances of quick payment.
That’s better for you and your business.